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Author:

Ramon Casadesus-Masanell

Author:

Namrata Arora

Best Seller:

FALSE

Breadcrumb Series:

HBS Global Research Center: India Research Center (IRC)

Classic:

FALSE

Copyright Perm Flag:

TRUE

Educator Message Flag:

TRUE

Exclusive:

FALSE

Industry:

Retail & Consumer Goods

Pages:

23

Primary Category:

Case

Publish Date:

October 17, 2017

Publish Date Range:

Older than 24 months

Related Topics:

Strategy

Related Topics:

Entrepreneurship

Related Topics:

Globalization

Related Topics:

Emerging markets

Related Topics:

Inventory

Related Topics:

Logistics

Related Topics:

Expansion

Related Topics:

Competition

Related Topics:

Business models

Source:

Harvard Business School

Special Value:

FALSE

Subcategory:

Strategy & Execution

Subject:

Strategy & Execution

SubjectList:

Strategy,Logistics,Expansion,Competition,Business models

Item:

#718401-PDF-ENG

Industry:

Retail & Consumer Goods

Pages:

23

Publication Date:

October 17, 2017

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Product Description

Publication Date:October 17, 2017

Industry:Retail & Consumer Goods

Source:Harvard Business School

Founded in 2012, Jumia Nigeria, a startup effort by Germany-based Rocket Internet, aimed to become an African Amazon. The company entered the nascent market and immediately enjoyed an uptick in consumer spending fueled by the strength of Nigeria's oil-based economy. By 2016, however, Jumia's growth had begun to taper, hindered by plummeting oil prices, the subsequent economic downturn, and the pressure of Nigeria's limited retail ecosystem. In addition, Jumia's inventory-intensive retail model required significant infusions of capital that, in the face of a deteriorating economy and the company's inability to show a profit, was becoming increasingly difficult to obtain. Considering all this and looking to the success of the Amazon and Alibaba marketplace models where third-party sellers largely carried inventory costs, the Board had made a drastic decision: Jumia would shift from an online retail model to a marketplace model. They also made it very clear that a failure to properly implement this transition could mean the end of investor support for Jumia. Senior management wondered how they would meet the challenges ahead. While Amazon in the US and Alibaba in China had found success with the marketplace model, they wondered if Jumia would be able to do the same. Was this the right model for the very different Nigerian environment? Would vendors, many of whom already had retail operations in the country, choose to sell through Jumia? How could Jumia continue to provide the same high quality customer service on which the company's success had been built while switching to a marketplace model in which parts of this critical aspect would now be in the hands of third parties?